Understanding a Palace Economy

There’s this concept I’m trying to wrap my head around in my ongoing research for Rumors of War. It’s called the “palace economy,” and it’s a prominent feature of the Late Bronze Age/Minoan era that Rumors of War takes place in. It’s a medium-to-large departure from the types of feudal economies or the free market economies that I’m more familiar with, and it necessitates some real-world analogs for me to be able to process it. I’m missing the history major background that would inform me of how this stuff works, so I’m trying to make do with a combination of Wikipedia, Dungeons & Dragons, and my imagination.

So, in a palace economy, you have a king, presumably one of the biggest, baddest dudes in your town/village/nation. He probably has a big family, which I note because lots of kings in mythology had, like, fifty sons and/or daughters. Do they have harems? Lots of wives? I guess they’re at the center of the economy, so probably. They’d probably be surrounded by merchants and advisers, because all the wealth goes through the palace. The king tells everyone what plants to sow, what animals to raise, and then distributes seed and tools and stuff. Wikipedia calls it a combination of a “command” and a “subsistence” economy.

Presumably, the army and defenses go through the king, too. He’ll have the soldiers and be in charge of defense of the settlement. I’m kind of imagining what it would be like if the mall was the center of the economy, with the proprietor of the mall being the guy in charge — you have all of these stores that people would work in, maybe even live in, and you’d have people who came to the mall to have the ruler arbitrate their disputes and stuff. Would there be a “nobility” class? I’m looking at it like there’s basically just the people on the top rung and the people on the bottom rung, and they’re probably about the same size, population-wise, with the ruling class being a little smaller. I could be totally wrong. xP